News

Amazon and Uber expand their food delivery options

January 21, 2016 04:48 PM

Amazon.com Inc. and Uber Technologies Inc. are looking to turn up the heat on competitors in the meal delivery space.

Amazon, No. 1 in the Internet Retailer 2015 Top 500 Guide, today announced it has expanded its restaurant delivery service to Chicago, the sixth market where Amazon delivers restaurant meals. It also offers the service in Seattle, Los Angeles; Portland, Ore.; Austin, Texas; and Baltimore.

Here’s how it works: Consumers who subscribe to the online retail giant’s $99 per year Amazon Prime loyalty program and live in one of 18 ZIP codes across Chicago can place orders from around 80 restaurants through Amazon’s Prime Now mobile app. A customers can track an order from the restaurant through delivery, which Amazon says takes an average of 39 minutes to complete.

Amazon’s announcement comes on the heels of Uber making a similar move. The ride-hailing service on Thursday said it is expanding its UberEats service to include a full menu in 10 cities in the U.S., including New York, Los Angeles and Chicago. Right now, Uber offers a menu that changes daily in the U.S. Now, UberEats will follow its Toronto model in the U.S., which allows shoppers to choose from a limited menu for instant delivery in under ten minutes or from a more expansive offering from more than 100 restaurants across the city, but without the instant delivery time.

Other food delivery companies, such as GrubHub Inc., will be hurt by Uber’s move, analyst Kevin Kopelman at Cowen and Company LLC said in a research note. "We see Uber's existing installed base of both users and drivers as providing potentially important advantages vs. many existing competitors in food delivery," he said in the research note.

Tom Caporaso, CEO of shipping software provider Clarus Commerce, says Amazon’s expansion of its restaurant delivery offering is a further indication of the retailer’s desire to be a one-stop shop for consumers.

“By expanding its e-commerce offerings, Amazon is further flexing its muscle, proving that it’s the biggest retailer out there and that it’s not going to rest on its laurels,” he says. “This just adds that much more pressure to other retailers, which are already struggling to keep up.”

With more shoppers saying they want same day delivery, Caporaso says retailers and restaurants alike need to think more how they’re going to meet that demand.

“Amazon’s ability to come into local markets and deliver goods within a couple of hours will force (others) to come up with countermeasures just to keep their own customers, let alone build their audiences,” he says.